The outlook for the pork sector has been tempered by the continued threat of PEDv, — Porcine Epidemic Diarrhea virus — which has affected more than 7 million pigs in 30 states over the past year. To date, Arkansas is one of the few agricultural states without a confirmed case.
There was an Arkansas case recently reported in error, but that was corrected in the national data base.
Analysts said the impact of the wide spread disease will likely be felt in late summer and and early fall as pork prices continue to rise. Profit margins for U.S. hog producers were at high levels in May and June as the threat of PEDv pushed hog prices to historic highs, aided by more favorable feed prices. (Link here for a PDF explainer from the U.S. Department of Agriculture about the virus.)
Hog producer margins averaged $65 per head in May and $73 per head in June. Margins are significantly higher than last year, when they were at break-even levels, according to a recent Rabobank report. Analysts expect 2014 margins to average $60 per head.
While there are fewer pigs going to market, the weights are up by about 10%. Tyson Foods, one of the largest pork processors in the U.S., said in May that it planned to reduce production more this summer as it copes with a drop in pig supplies as a result of PEDv. Tyson expects pork supplies to be down as much as 4.5% this year due to the deadly piglet virus.
The American Association of Swine Veterinarians reported 105 new positive cases of PEDV last week out of 773 tests conducted at nine diagnostic centers across the U.S.
Iowa, a large swine production state has seen the biggest impact with more than 2,100 confirmed cases, nearly twice the number in the next most active state for PEDV — Minnesota has reported more than 1,230 cases since testing began in November 2013.
Last week the National Pork Board reviewed the most recent breeding numbers and said that despite active PEDv in many states, the breeding herd is relatively stable, with the March to May pig crop being closely watched, given the disease strikes piglets. The report indicates there are 26.371 million piglets in the U.S. being finished out. That number is down sharply from 2.979 million a year ago.
Farmers are working to lower the mortality rate with 9.78 pigs per litter saved in the March to May pig crop. The mortality rate is up 5% in the past year.
“We really saw profitability begin to pick up in (September) 2013,” noted Dr. Chris Hurt, professor at Purdue University. “We thought we’d see some expansion showing up, but this report says, no, that is not the case.”
He said the other surprise is in the March to May farrowings where there were expectations for up to 2% gains. Instead they were down fractionally. Hurt said warm months have reduced PEDv losses, but they aren’t under control yet.
The majority of cases have occurred in large commercial farms where animal concentration is dense. Several large grow-out farms for commercial processors have made the commitment to switch to modified housing options and as a result, their gestation barns hold fewer breeding animals.
Local suppliers like Mason Creek Farms, and others in the Boston Mountain Breeder Association said their pasture raised hog herds looks healthy and they continue to guard against the virus being tracked onto their farms from officials who visit larger commercial operations.
On June 5 the U.S. Department of Agriculture announced $26.2 million in funding to combat the diseases wreaking havoc on the U.S. pork industry. USDA issued a federal order requiring the reporting of new detections of these viruses to its Animal and Plant Health Inspection Service (APHIS) or State animal health officials.
"In the last year, industry has estimated PEDv has killed some 7 million piglets and caused tremendous hardship for many American pork producers," said Agriculture Secretary Vilsack. "The number of market-ready hogs this summer could fall by more than 10% relative to 2013 because of PEDv. Together with industry and our state partners, the steps we will take through the federal order will strengthen the response to PEDv and these other viruses and help us lessen the impact to producers, which ultimately benefit the consumers who have seen store pork prices rise by almost 10% in the past year."
The $26.2 million will be used for a variety of activities to support producers and combat these diseases, including:
• $3.9 million to support the development of vaccines
• $2.4 million to support management and control activities
• $500,000 to herd veterinarians on monitoring of herd management plans and sample collection
• $11.1 million in cost-share funding for producers of infected herds for biosecurity practices.
• $2.4 million for diagnostic testing
• $1.5 million for genomic sequencing for newly positive herds